Europe various parliaments are literally balking at the idea of a free VISA for Turkish people.

Turkey does not want to change the terror law to suit Europe and Europe is not giving up.

The issue is much deeper than that. With 75 million Muslim population the agreement could literally change the face of Europe in the next 10 year…from Christian to Muslim.

Iraq; Turkey went literally mad to see US Special forces embedded with the Kurdish forces (labelled terrorist by Turkey) and wearing Kurdish badges.

Syria: again there is an issue as the US support the YPD (Kurds again) while Turkey supports salafist groups like Al Nusra (Al Qaeda in Syria…but it is trying to separate itself from the Al Qaeda franchise). Turkey is much more preoccupied in stopping the Kurds advance than dealing with IS.

Meanwhile Russia is planning for revenge (against Al -Nusra apparently) in retaliation of the terror attacks in Tartus.

This morning I got quite upset when I heard the President Obama speech in Hiroshima about “never again nuclear war”.

Such a lie.

During President Obama there has been an extreme push to update and upgrade the nuclear arsenal, even with supposedly clean (so usable) nuclear bombs. Over USD 1 trillion has been spent on it since 2014 – the biggest sum after the end of the Cold War

The US is maintaining circa 1,900 nuclear warheads.

Upgrading and refurbishing the ICBM Minuteman (all of them)- land and marine version

Creation of a “mini” nuclear smart bomb delivered by fighter jets (B61 Model 12). This bomb has been deployed in 2015 to the Buchel Airbase in Germany (first time a new nuclear warhead has been deployed in Europe after the fall of the USSR)

A B61 nuclear bomb with a “dial a yield” function (it can decrease the yield down to 2% and up to 100% – depending on target)

Development of a nuclear capable advanced cruise missile

President Obama is pushing for the developments of the hyper-sonic first strike missile (Prompt Global Strike)

The much criticized President W Bush reduced the nuclear weapons from 10,000 to 5,000 – President Obama from 4,950 to 4,700(Source Federation of American Scientist) – but much more modern…compact and “usable”.

And Hillary Clinton will follow his lead.

The Russian and Chinese are doing the same – but at least they do not tell lies.

It did surprise also me – as I m quite busy in setting up some models and systems…even if I wrote few month ago the solution of the conundrum.

I wrote that Crowded Trades (where everyone thinks and does the same in the last two years does not work in this period).

Since start of April, everyone and his dog has been very bearish on the market and bullish on gold. Once every one thinks like that, the market goes in reverse.

Until when? Until, like now, people are starting doubting their bearishness or their idea of being long gold – which could last well into all June.

Remember what happened in December…everyone was scared of the Fed hike….the Fed hiked…all went well for the next 10 days and then January started the killing fields.

The market could well behave like this until the days after the 23 June Brexit – and then go for a kill.

Or if you want to be less sanguine – SP500 2,040 to 2,130 NOTHING HAPPENS (or ASX200 5,000/5,400 or Gold USD1,200/USD1,300) – it is a simple consolidation pattern (weakening as, between others, there had been no breach of the top, till now, and an intraday breach, of the bottom support).

So hold on to your beliefs and don’t chase swinging modes, we are in uncharted territories after all. As in the old maps “Here be Dragons” (or more correctly ‘Hic Sunt Dracones’ from Latin)

The blatant start of the end of the European democratic experiment rightfully started in Greece – where the government did not abide to the referendum.

It continued with Portugal and now Austria.

The votes have been decided by postal vote which shows a massive swing to the ‘correct’ candidate (in the general vote the Right Wing candidate was on average on 58% while in the postal vote was about 38%).

In various occasion I wrote this same post…and in various occasion after a little while the market tanked.

The bond market is entirely made by professionals – so there is not “sentiment” or running for yield. It is a pure logic play.

The US yield curve is flattening (the short term US note is approx 0.8% and the 10 years is 1.8%)…a difference of 0.9% – lowest since December 2007.

When the curve inverted (2 year note with a yield higher then the 10 years ) the USA ALWAYS went into recession (well apart 1998, but it inverted for a very short time – a false signal)

Now with this low yield environment is really hard for the yield curve to invert – so we could get a recession just with a flattening yield.

Not to be too pessimistic, a flat curve yield could be just a signal from the market to the FED that hiking interest rates in June is a policy mistake as the economy is not strong enough and the real scenario is muddle through and not economic growth, as the politicians would love us to believe.

In April the Federal Reserve a unscheduled meeting and then requested a ‘secret’ meeting with the US President and the Vice President (picked up only as someone went through the US Presidential schedule).

Nobody knows what it is and what they discussed. But definitely is out of pattern.

Then in May the FED starts to jawboning the market into thinking there is a rate hike and that it does not exclude negative rates.

I do not know, but it could simply be that the Fed is running out of ammo for real or it has to do something that hurts the market to save the economy.